The Office of Inspector General for the Department of Health and Human Services (OIG) and the Centers for Medicare & Medicaid Services (CMS) have proposed to extend the sunset date on the safe harbor and exception for donation of electronic health records (EHR) items and services to December 31, 2016. According to CMS and the OIG, an extension in the sunset date is necessary because use of EHR technology “has not yet been universally adopted nationwide, and continued [EHR] technology adoption remains an important….goal.”

As explained in an earlier post, the health care industry anticipated that the agencies would propose this extension to encourage wider use of EHR technology. But what many did not expect is the agencies’ keen interest in limiting protected donors due to “concerns about the potential for abuse” by certain types of providers and suppliers, including “providers and suppliers of ancillary services who do not have a direct and primary patient care relationship and a central role in the health care delivery infrastructure.”

Neither agency proposed specific changes to the definition of “protected donors.” Both are considering – and seeking comments on – whether to limit authorized donors to hospitals, group practices, Prescription Drug Plan sponsors, and Medicare Advantage organizations and whether this list (which is consistent with the authorizing statute) should be expanded to include others, such as safety net providers. In the alternative, the agencies are thinking about excluding suppliers of ancillary services “associated with a high risk of fraud and abuse, because the donations by such suppliers may be more likely to be motivated by a purpose of securing future business than by a purpose of better coordinating care for beneficiaries across health care settings.” The agencies mentioned laboratory companies, durable medical equipment suppliers, and independent home health agencies.

The agencies also are interested in new or modified conditions that would prevent “data and referral lock-in” and that would thus encourage the free exchange of data. The OIG has received reports that donors are using the safe harbor to the Anti-Kickback Statute to provide referral sources with items and services that “appear to support the interoperable exchange of information on their face, but, in practice, lead to data and referral lock-in.”

Finally, the agencies also proposed to remove the requirement related to electronic prescribing capability and to make certain changes to the provision on deeming software to be interoperable.

The proposed rules seem to contain something for everyone – many hospitals are undoubtedly breathing a sign of relief that they likely can continue to donate EHR items and services to their physicians for another three years while most providers and suppliers of ancillary services (such as independent laboratories) are happy to hear that the agencies may no longer consider them to be protected donors. CMS’s proposed rule and the OIG’s proposed rule, which are currently on display for inspection, are expected to be published in the Federal Register on April 10, 2013. The agencies will accept comments for sixty days following publication.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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